Price and Costs

On this page, you’ll find the Center’s research on the complex world of pharmaceutical pricing. Our focus will be breaking down current pharmaceutical pricing structures and processes and potential reforms to improve efficiency and innovation; evaluating the impact of regulatory-created inefficiencies such as Pharmacy Benefit Managers (PBMs) and the 340B program; and analyzing how policy proposals such as price controls and drug importation would undermine competition.

BY WAYNE WINEGARDEN AND CELINE BOOKIN Part 1 of the Coverage Denied series documented how distortions in the U.S. healthcare system turned the important financial risk management service of health insurance into a barrier to care and an important driver of health care inflation. The insurance industry’s adverse impact on costs is ironic given its current focus on implementing cost control measures.  Unfortunately, the problems of increasing obstacles to care and decreasing health care affordability are the expected outcomes from the current...

For current and future taxpayers, 2021 was a brutal year—at least when it comes to healthcare spending. Congress and the Biden administration approved tens of billions in new expenditures. Much of that money was, or will be, wasted on inefficient programs and subsidies that do little to improve the quality of care that Americans receive. But the bill will come due regardless. The president kicked off his first term with a massive $1.9 trillion stimulus package, the American Rescue Plan. About $34 billion went to...

Wayne Winegarden, PhD, Discusses the Value of an Interchangeable Designation for Adalimumab Biosimilars December 19, 2021 Skylar Jeremias The Center for Biosimilars® interviewed Wayne Winegarden, PhD, senior fellow in business and economics at Pacific Research Institute (PRI) and director of PRI’s Center for Medical Economics and Innovation. Click here to watch. Winegarden talked about how interchangeability designations are more important for biosimilars referencing adalimumab (Humira) because they would not administered by a physician in a clinic, unlike oncology biosimilars, which pharmacists do not interact with...

Using the ruse of “price negotiation”, the proponents of the Build Back Better legislation are pushing an ill-fated drug price control plan. Patients will bear exceptionally large costs should their idea of government-directed prices become law. These costs will include lower health outcomes due to reduced access to innovative drugs. They will also include increases in other types of healthcare spending as less drug access would, ironically, increase hospitalizations and use of other healthcare services and could more than offset any...

This month, Delta Airlines began levying a $200 monthly surcharge on unvaccinated employees enrolled in the company’s health plan for the financial “risk” they are supposedly imposing on the company. The airliner is not alone. A major health-care system in Louisiana plans to do the same for unvaccinated spouses on its health plan next year. And a retailer in Utah announced last month that unvaccinated employees would have to pay extra for insurance. In other words, medical underwriting — the practice of...

Inflation is worrying Americans, and for good reason. The latest inflation report, the Consumer Price Index (CPI) released on November 10th, showed that prices were 6.2 percent higher in October 2021 compared to October 2020. More troubling, this was the fifth month in a row where the annual growth in CPI inflation exceeded five percent. Digging deeper into the CPI data provides important perspective on another pressing issue – the growth in drug prices. While fluid, the so-called Build Back Better...

Policies that promote biosimilar competition have the potential to save U.S. patients up to $5.8 billion collectively if biosimilars to Humira and Enbrel grow in market share, finds a new brief released today by the Center for Medical Economics and Innovation at the nonpartisan Pacific Research Institute, a California-based, free-market think tank. Click to download “Generating Drug Savings Through Competition” “The significant savings potential that patients and taxpayers alike would realize from introducing biosimilars to Humira and Enbrel to the U.S. market...

Addressing the ongoing problems with the U.S. health insurance system, the Center for Medical Economics and Innovation at the nonpartisan Pacific Research Institute today announced the release of the first paper in the Coverage Denied series, which will analyze and propose reforms to fix the problems in the current system that threaten patient health outcomes and often lead to huge financial risks for patients facing unexpected or chronic health care challenges. Click to download the first paper in PRI’s Coverage Denied...

Today, the Pacific Research Institute published an issue brief revealing overwhelming public disapproval for Medicare reforms that Congress is considering as part of its $3.5 trillion spending bill. Click here to read the full issue brief, "Drug Pricing Proposals Threaten America's Most Vulnerable Patients." "It's a relief that Americans oppose Congress's drug pricing proposals once voters learn the true consequences of these misguided reforms," said Sally C. Pipes, the brief's co-author and PRI president, CEO, and Thomas W. Smith Fellow in Health...

DOWLOAD THE PDF In October 2019, the Center for Medical Economics and Innovation at the Pacific Research Institute released its second study documenting the savings potential enabled by biosimilars. Biosimilars are medicines manufactured in, or derived from, biological sources that are developed to be similar to FDA-approved reference products. Biosimilars are approved to compete in nine biologic drug classes in the U.S. and are available in seven of these drug classes currently.  Since 2018, biosimilars’ market share has grown appreciably, see Figure...

"Everyday low prices" are coming to health care. Walmart recently launched its own private-label analog insulin, a synthetic form of the hormone that's been genetically modified to be released rapidly or slowly, depending on a per- son's needs. It will be manufactured by pharmaceutical giant Novo Nordisk – but costs 75% less than brand-name analog insulin. The deal is obviously good for people with diabetes, who have long clamored for more affordable insulin. And Wal- mart and Novo Nordisk wouldn't have...

Imagine you’re in the market for a new car. You go to the dealership, take a few models out for a test drive, and ultimately choose the one that has the features and driving experience you’re looking for. But now imagine that there’s no sticker price. You just tell the salesperson you’ll take it — and silently pray that it’s not too expensive. You’ll find out how much you owe in a few weeks, when the bill comes in the mail. Of...

Establishing a two-part drug pricing system quantifying separate values for a drug’s innovation and production would create an efficient market and a more accurate reflection of how patients value a drug compared to those produced by centralized organizations, argues a new report released today by the Center for Medical Economics and Innovation at the Pacific Research Institute. Click to download “Establishing a Two-Part Drug Pricing System to Promote Value-Based Pricing and Innovation” “Some policymakers assume that only a centralized agency can determine...

Proponents from states such as California, Oregon, and Connecticut all claim that “pay for delay” legislation is necessary to rein in the pharmaceutical industry’s anti-competitive practices. If implemented, the bills will impose a high cost on patients by raising the costs of medicines and delaying generic entry into the market. Pay for delay tactics refers to the practice of patented drug manufacturers paying off generic manufacturers for the sole purpose of delaying the launch of competitive products. When successful, such tactics...

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A commonly-used analysis to determine a medicine’s value is based on flawed methodologies that would diminish innovation and access, finds a new report released today by the nonpartisan Center for Medical Economics and Innovation at the Pacific Research Institute. “Cost effectiveness reports may provide precise estimates, but there is no reason to believe that these estimates accurately reflect the value of medicines,” said Dr. Wayne Winegarden, the brief’s author.  “The documented biases in their value assessments should raise serious concerns that...